IT-Silkroad

[Japan's Priority Order of Tariff Rate Application]

■ Outline

ㅇTariff rate is comparatively determined depending on ① items, ② trading partners, and ③application priority according to type of tariffs. Accordingly, you should not make a hasty conclusion that a specific item has a specific percentage of tariff rate.

ㅇAny country adopts the Notification Principle with respect to the adoption of tariff rate and payment of tax. Therefore, a taxpayer may pay customs duty based on high tariff rate even though such person may be eligible for paying tax by applying low tariff rate for his/her own interests(for example, taxpayers may choose the application of basic tariff rate by giving up the benefits of conventional tariff only for the sake of avoiding hassles of obtaining certificate of origin, etc.).

ㅇOne tariff rate is generally fixed by a HS code, but same HS code doesn't always have the same tariff rate(often, one HS code has more than two tariff rates by kind of items.).

ㅇGenerally, multiple tariff rates are applicable to specific goods, but only one tariff rate is determined finally. The final tariff rate is determined by comprehensively taking into account application priority by laws and regulations, international agreements, trading partners, and the compliance of export/import requirements.

■ Japan's Application Priority of Tariff Rates

Japan has no export duty, but only import duty.

Import duty(ad valorem duty) is determined by multiplying dutiable value by tariff rate, and dutiable value of goods imported to Taiwan is based on CIF price.

For tariff rate which is applicable to specific countries, such tariff rate may be applied only when import from such countries has been made.

In case where multiple tariff rates compete for specific goods, the priority order of application is as below(several complicated steps shall be went through to compute actual tariff amount including processes of conversion into local currency, of treatment of a fraction, and of considering specific duty, etc.).

☉ Priority 1 : Special Preferential Tariff (LDCs Tariff)

Special preferential tariff(LDCs tariff - Least Developed Countries) is applied to specific goods imported from less developed countries, and it may be applied preferentially than all of other tariff rates.

Provided, that for the application of such tariff rate, certificate of origin issued by an exporting country shall be obtained and presented to Customs.

☉ Priority 2 : Preferential Tariff (GSP Tariff)

Preferential tariff refers to a low tariff rate applicable to specific goods imported from less developed countries.

Preferential tariff is applied preferentially than WTO conventional tariff, provisional tariff, and general tariff, and it may be applied preferentially only if it's lower than EPA tariff rate.

For the application of such tariff rate, certificate of origin issued by an exporting country shall be obtained and presented to Customs.

☉ Priority 3 : EPA Tariff

EPA(Economic Partnership Agreements) tariff refers to a tariff rate applied according to schedules for reduction or elimination of tariffs based on the agreements signed between Japan and specific countries(similar with FTA conventional tariffs).

EPA tariffs may be applied preferentially if they are lower than WTO conventional tariffs, provisional tariffs, and general tariffs, or same as or lower than preferential tariffs.

For the application of such tariff rate, certificate of origin issued by an exporting country shall be obtained and presented to Customs.

☉ Priority 4 : WTO Conventional Tariff

WTO Conventional Tariff refers to a tariff rate pledging that tariffs above specified tariff shall not be imposed on import goods originating from members of WTO. It applies to countries that have the Most Favoured Nations status in accordance with a reciprocal contract.

Such tariff may be applied preferentially only if it's lower than provisional tariffs and general tariffs.

Unlike LDC tariffs, preferential tariffs and EPA tariffs, WTO conventional tariffs may be applied without obtaining certificate of origin.

☉ Priority 5 : Provisional Tariff

It's a tariff rate applied in a provisional and elastic manner only under the specific circumstances, which is specified by Japan's Act on Temporary Measures concerning Customs.

Provisional tariffs may be applied preferentially than general tariffs.

☉ Priority 6 : General Tariff

General tariff is a basic tariff rate applied in a long-term prospective, based on Japan's Customs Tariff Act.

General tariff is fixed for all sorts of items, and it's applied in a subordinated order of tariff rate application.

■ Other Notes

ㅇThis TCS program provides information, supposing that taxpayers will generally choose the lowest tariff rates.

ㅇThis TCS program provides information, supposing that more than two tariff rates may be applied simultaneously, and if such tariff rates are the same, a taxpayer has tendency to choose a tariff rate which helps him/her to avoid hassles of business concerned(for example, if both FTA conventional tariff and basic tariff are 0%, a basic tariff which doesn't require certificate of origin may be recommended as final applied tariff under this program.).

ㅇThis TCS system suggests lower tariff rate and tariff amount in principle if tariff rate varies according to whether specific conditions are complied with or not, supposing that general taxpayers wish to have lower tariff rate be applied by meeting the conditions required as possible as they can.

However, considering that taxpayers may fail to comply with the conditions required, applied tariff and its amount applicable to such circumstance is also available under the TCS program(for example, for FTA tariffs, preferential tariffs for the Least Developed Country, etc. the effects of non-compliance of certificate of origin(C/O) are provided, and if failing to obtain quota for quota tariffs, the effects of failing to obtain quota.).

ㅇThis TCS program provides automated system for application priority of tariff rates, selection of final tariff rate, calculation of tariff amount, etc. by precisely analyzing laws and regulations of countries concerned. However, it doesn't contain some tariffs such as retaliatory tariff, anti-dumping tariff, and countervailing tariff, temporarily applicable to specific countries and enterprises.

ㅇThis TCS system provides charts relating to kind of tariff rates and their tariff amounts, and tariff rate finally selected and its tariff amount(click competitive tariff button!).